Thailand Explores Energy Cost Reductions While Balancing Renewable Investments

Thailand’s Energy Minister Pirapan Salirathavibhaga has proposed a significant reduction in electricity tariffs by adjusting the use of Pool Gas, a key component in the country’s energy generation mix. The proposed cut of nearly 0.40 baht per kilowatt-hour surpasses the 0.17 baht reduction initially suggested by the Energy Regulatory Commission (ERC), which had recommended lowering government subsidies for renewable energy investments instead.

Pirapan emphasized that modifying Pool Gas utilization would be a legally sound approach to reducing electricity costs, unlike the ERC’s proposal, which could face regulatory challenges. Pool Gas, derived from multiple sources including the Gulf of Thailand, Myanmar, and imported liquefied natural gas (LNG), constitutes over 60% of the country’s power generation supply.

High LNG import costs have been a major driver of rising electricity tariffs. The Energy Minister indicated that better management of Pool Gas distribution across power generation and industrial use could help lower electricity rates. While specific implementation details were not disclosed, analysts suggest the adjustments could allow electricity producers to procure gas at lower prices than industrial enterprises.

“We are working on Pool Gas management, hoping to reduce electricity prices in the next four-month cycle,” Pirapan stated. The current power tariff, set at 4.15 baht per unit from January to April, is reviewed quarterly by the ERC. The minister expressed confidence in bringing it below 4 baht per unit through structural reforms.

The ERC has urged the government to consider reducing investment incentives for renewable energy projects, which are currently supported through feed-in tariffs and adder tariffs for private power producers. These incentives account for 4% of the electricity tariff, according to energy officials.

However, Pirapan warned that canceling these financial mechanisms, which are automatically renewed every five years, could lead to legal disputes. The debate underscores Thailand’s challenge in balancing short-term electricity cost reductions with long-term commitments to renewable energy expansion.